Luxembourg fund migration programme

What's happened?

We have taken several steps to ensure the interests of our investors domiciled outside the UK are protected, regardless of the outcome of the Brexit negotiations between the UK and the EU.

Following the approval of our shareholders, the CSSF and FCA, we have successfully transferred the non-sterling share classes of 25 of our UK-domiciled OEIC funds to equivalent Luxembourg-domiciled SICAV strategies. The mergers are now complete.

The mergers protect the interests of our non-UK customers by offering continued access to the current range of M&G Investments strategies.

Since the Brexit referendum in 2016, we have also established a new legal and corporate structure in Luxembourg, as well as a distribution platform for our expanded range of SICAV funds. That process was completed in October 2018. Our Luxembourg office is now fully staffed, operational and MifidII compliant.

Our priority is to minimise disruption for our investors by providing as much certainty as we can.

Frequently asked questions

Q: What happened?

A: In 2018 we wrote to investors in the non-sterling share classes of 25 of our UK-domiciled funds with a proposal to fully merge the assets in these share classes with equivalent Luxembourg-domiciled funds.

These proposals were subject to shareholder approval, which was attained at a series of Extraordinary General Meetings.

Between March 2018 and March 2019, 25 funds were successfully migrated. The fund migration process is now complete.

Q: Are the new Luxembourg-domiciled funds following the same investment strategies and are they managed by the same investment teams?

A: Yes.

Q: Do the equivalent Luxembourg funds have the same management fees?

A: The Annual Management Charge is the same, but OCF might be slightly higher for a combination of Luxembourg’s taxe d’abonnement and smaller fund sizes. Luxembourg’s taxe d’abonnement is 0.05% per annum for retail investors and 0.01% per annum for institutional investors. The reduced size of the new SICAVs is not expected to have a material impact on the OCF, but in the worst case is forecasted to increase by 0.02%. In total this may mean that the OCF could increase by 0.07%.

Q: Do the new SICAV funds have the same performance track record of the original OEIC funds?

A: Yes.

Q: Did shareholders in the SICAV funds receive the same shares they held in the OEIC funds?

A: Shareholders received new shares in the Luxembourg-domiciled funds of the same class and type as their existing shares in the UK-domiciled funds.

Q: What are the ISIN codes for the OEICs and SICAVs equivalents in the funds impacted?

Q: Will investors buying into the SICAVs get the same portfolio as their equivalent OEICs?

A: The funds are run by the same investment teams and follow the same investment strategies. Their portfolios may not be identical as they will receive different flows, have different assets under management and operate under different tax rates.

Q: What if I hold a fund which has not transferred to Luxembourg and doesn’t have a Luxembourg equivalent?

A: The vast majority of M&G funds being promoted outside the UK have already transferred to Luxembourg with this initiative. We will contact investors in any funds with no Luxembourg equivalent with our plans in due course.

Q: What are the differences between OEICs and SICAVs?

A: For most practical purposes, the OEIC and SICAV structures are very similar, both offering the ability to establish umbrella companies with a number of single-priced sub-funds.

LEGAL STRUCTURE AND REGULATION

OEIC

SICAV

Definition

Open-ended investment company (UK-domiciled)

Société d'investissement à capital variable (Luxembourg-domiciled)

Background

Commonly used in the UK, also used in Western Europe and other regions

Introduced in the UK in 1997 as a flexible alternative to unit trusts

Commonly used in Western Europe, also in other regions

Introduced early in the last century

Legal structure / UCITS

An OEIC can be established as an umbrella company with a number of sub-funds, or as a stand-alone fund

It can issue a range of shares, including hedged shares

It can be established as a UCITS or retail non-UCITS

A SICAV can be established as an umbrella company with a number of sub-funds, or as a stand-alone fund

It can issue a range of shares, including hedged shares

It can be established as a UCITS or retail non-UCITS

Regulatory authority

Financial Conduct Authority (FCA), in the UK

Commission de Surveillance du Secteur Financier (CSSF), in Luxembourg

Corporate governance

The Authorised Corporate Director (ACD) is responsible for the day-do-day operation of the OEIC

A SICAV can have a specific management company or be managed by its Board of Directors

Role of Depositary / Custodian

A Depositary is responsible for the custody of fund assets

The Depositary is also responsible for oversight of the ACD to ensure the interests of investors are protected

The Depositary and ACD must be completely independent

A Depositary (Luxembourg-based) is responsible for the custody of fund assets and ensuring the interests of investors are maintained

The Depositary is also responsible for oversight of the investment to ensure the interests of investors are protected

Segregation of liability between sub-funds

Legislation to allow the segregation of liability between sub-funds in an umbrella OEIC provided for under UK law

Segregation of liability between sub-funds is provided for under Luxembourg law

Contact

On 5 September 2018, we sent all documentation relevant to the mergers to our investors, including comparisons of the UK and Luxembourg funds and Key Investor Information Documents for the Luxembourg funds.

Please note that you may have not received this documentation directly if you hold our funds through an intermediary or platform.

For Investment Professionals only. Not for onward distribution to any other type of client. No other persons should rely on the information contained on this website. Content should therefore be shared responsibly with other investment professionals. The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.